In "'David-And-Goliath-Like' Struggle for Electronic Discovery", Court Orders Adverse Inference, Monetary Sanctions for Spoliation and Delay

Harkabi v. Sandisk Corp., 08 Civ. 8203 (WHP) (S.D.N.Y. Aug, 23, 2010)

For failing to preserve the laptops issued to plaintiffs while working for defendant, the court found defendant was “at a minimum” negligent and indicated that an adverse inference would be crafted after all the evidence had been received. For “prolonged delay” in producing relevant emails the court denied terminating sanctions but ordered monetary sanctions in the amount of $150,000.

This opinion begins: “Electronic discovery requires litigants to scour disparate data storage mediums and formats for potentially relevant documents. That undertaking involves dueling considerations: thoroughness and cost. This motion illustrated the perils of failing to strike the proper balance.”

Plaintiffs were fired by defendant and thereafter brought suit for breach of contract, among other things. With the dispute “brewing”, plaintiffs’ counsel sent defendant a preservation letter. Accordingly, a “Do-Not-Destroy” memorandum was distributed by defendant and the laptops issued to plaintiffs while employed with defendant were secured in storage. Later, however, following installation of a new email archive service, the laptops were imaged and the data was saved on a file server.

Upon plaintiffs’ request for electronic discovery, defendant discovered it could not locate the laptops’ data. Rather than revealing the loss, however, defense counsel informed plaintiffs that laptops were typically recycled after employees left the company. A statement from defendant’s in-house counsel indicated “no reason to believe” that the “Do-Not-Destroy” instructions were not “fully complied with”. Later, defendant characterized a large native production of ESI as “everything.” Defendant thereafter refused to produce plaintiffs’ hard drives asserting all relevant documents from the drives had been produced.

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Source: ediscoverylaw.com